A smart watch would not change Apple's fortunes drastically, but it would alter the perception it has stopped innovating.

Those were the words of Apple ( AAPL) Senior Vice President of Worldwide Marketing Phil Schiller during Apple's developer conference last week, when talking about the new Mac Pro Apple was showing off. Clearly, the perception that Apple can't innovate anymore is not only bothering investors, but the company as well. A new product, such as the iWatch, would go along way toward changing that perception, even if it isn't likely to have a major impact on the company's business.

Jefferies analyst Peter Misek notes that the iWatch "will more likely be a hobby for Apple than a major new product line." Misek, who rates, Apple shares "hold," notes that "Apple would need to redefine the watch market for it to have a substantial impact on our estimates."

Morgan Stanley analyst Katy Huberty estimates the watch could be worth as much as $10 billion to $15 billion in annual revenue for Apple. Piper Jaffray's Gene Munster has thrown out similar numbers, as have others who've speculated on the yet-to-be-announced device.

A product that does between $10 billion and $15 billion in annual sales isn't going to drastically move the needle for a company that is projected $171.4 billion in fiscal 2013, and $187 billion in fiscal 2014, per Thomson Reuters. It's about changing the perception that Apple has a pipeline left, and can still make products that people want to buy, even if they don't necessarily need them.

Innovation is the heart of technology, and perhaps part of the reason Google shareholders have rewarded the company this year. Shares are up 25.3% year-to-date, as investors get excited about Google Glass, driverless cars, and other projects. Apple has not shown that to investors, and likely never will, as the company, led by CEO Tim Cook, likes keeping its product pipeline a secret.

Misek isn't the first analyst to say Apple needs to redefine the watch market. Currently no one dominates the space, despite attempts by Nike ( NKE) and others, and reports that Google ( GOOG) and Microsoft ( MSFT) are planning similar devices. The market is still relatively small, especially when compared to Apple's other products.